Series 7 Exam Question 116: Answer and Explanation

Question: 116

The over-the-counter market is best described as a(n)

• A. auction market
• B. negotiated market
• C. centralized market
• D. first market

Correct Answer: B

Explanation:

B. Unlike the New York Stock Exchange, which is an auction market where people yell out their bid and ask prices, the over-the-counter market is a negotiated market. Trades for the over-the-counter market take place either through phone calls or through a computerized trading system.